Encumbrance
An encumbrance is any claim, lien, charge, or liability attached to real property that may diminish its value or burden its title, but does not necessarily prevent transfer of ownership.
Exam Tip
Encumbrance = ANY claim on property (liens, easements, restrictions). Lien = MONETARY encumbrance only. Both "run with the land."
What is an Encumbrance?
An encumbrance is anything that affects or limits the fee simple title to a property. It can be a monetary claim (lien) or a non-monetary limitation (restriction). Encumbrances don't prevent transfer but may affect value and marketability.
Types of Encumbrances
| Type | Category | Examples |
|---|---|---|
| Liens | Monetary | Mortgages, tax liens, mechanic's liens |
| Easements | Non-monetary | Utility access, right of way |
| Deed Restrictions | Non-monetary | HOA rules, building limits |
| Encroachments | Non-monetary | Fence over property line |
| Leases | Non-monetary | Tenant rights |
Monetary Encumbrances (Liens)
| Lien Type | Priority |
|---|---|
| Property Tax | Usually highest priority |
| Special Assessment | High priority |
| First Mortgage | Based on recording date |
| Mechanic's Lien | Varies by state |
| Judgment Lien | Based on recording date |
Non-Monetary Encumbrances
| Type | Description |
|---|---|
| Easement | Right to use another's land |
| Restrictive Covenant | Limits on property use |
| Encroachment | Physical intrusion on property |
| Lis Pendens | Pending lawsuit notice |
| Lease | Tenant occupancy rights |
Impact on Property
| Aspect | Effect of Encumbrance |
|---|---|
| Value | May reduce property value |
| Marketability | May complicate sale |
| Use | May restrict owner's use |
| Title | Must be disclosed |
| Transfer | Runs with the land |
Encumbrance vs. Lien
| Encumbrance | Lien |
|---|---|
| Broader term | Type of encumbrance |
| Monetary or non-monetary | Always monetary |
| May or may not affect value | Always affects value |
| Examples: easements, restrictions | Examples: mortgage, taxes |
Discovering Encumbrances
- Title search reveals recorded encumbrances
- Survey shows physical encroachments
- Title insurance protects against hidden ones
- HOA documents disclose restrictions
Clearing Encumbrances
| Method | Applicable To |
|---|---|
| Payment | Liens |
| Release deed | Easements |
| Correction | Errors |
| Quiet title action | Disputes |
Study This Term In
Related Terms
Lien
Real EstateA lien is a legal claim against a property that must be paid when the property is sold, serving as security for a debt or obligation.
Easement
Real EstateAn easement is a legal right to use another person's land for a specific purpose without owning it, such as a utility company's right to access power lines or a neighbor's right to use a shared driveway.
Title
Real EstateTitle is the legal right to own, use, and dispose of real property, representing the bundle of rights that come with property ownership.
Mechanic's Lien
Real EstateA mechanic's lien is a legal claim against a property by contractors, subcontractors, or suppliers who provided labor or materials for improvements but were not paid, creating a security interest in the property.